Surinder Mavi
Winnipeg, December 18
The Canadian dollar has slipped below 70 cents against the US dollar. The fall in the value of the Canadian dollar, also known as the loonie, follows this week’s upheaval, when Finance Minister Chrystia Freeland resigned from Prime Minister Justin Trudeau’s cabinet. According to Bloomberg data, 1 Canadian dollar this morning was recorded at 71.01 cents by afternoon after falling below 71 US cents. This was the lowest level since March 2020 during the Covid epidemic.
Due to the weak economy of Canada, the value of the Canadian dollar has come down. US President-elect Donald Trump has threatened to impose a 25% tariff on goods from Canada to the US, which could seriously hurt the Canadian economy. The US dollar has strengthened since Trump won the presidential election in November. Canada’s federal government released its Fall Economic Update, which revealed a budget deficit of $61.9 billion. The central bank has cut the interest rate four times this year. In October, the bank cut the rate by 50 basis points as the bank’s concern shifted from controlling inflation to the need for strong economic growth.
Douglas Porter, chief economist at the Bank of Montreal, said the US dollar has remained strong against most currencies, but the loonie has weakened against it over the past few weeks. He said that drastic interest rate cuts by the Bank of Canada, Trump’s tariff threats and then the resignation of the finance minister were also partly the reason. He said that unless there is relief on tariffs, or other good economic news, he does not think the loonie will strengthen in the near future.
Corpay’s chief market strategist, Karl Shamouta, said investors don’t expect Trump to follow through on the threat. Carl said the Canadian dollar could turn upside down after traders reassess the situation from a more nuanced perspective. While a weaker Canadian dollar raises costs for Canadians trying to shop cross-border on Black Friday this week, it also makes Canadian goods cheaper for shoppers with US dollars. A lower loonie means travel abroad could be more expensive for Canadians.
